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What an NRI can and cannot deduct, and the regime that decides it

You want to cut your Indian tax with the usual deductions, but as an NRI some are open to you, some are not, and the default regime removes most of them.

You have Indian income to file on, and you want to claim the deductions everyone talks about, 80C for investments, 80D for health cover, 80G for donations. Two things trip an NRI up here. First, the default tax regime now switches almost all of these off, so you may be filing in a way that denies them without realising it. Second, even under the regime that allows them, an NRI can claim some but not others, and a few are barred outright. Getting both right is often the difference between a refund and none.
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Last reviewed: 26 July 20267 min readReviewed by Preetesh Maloo, CA

The short answer

The big thing first: on the default new tax regime almost none of these deductions are available, so an NRI who wants to claim 80C, 80D or 80G must actively opt for the old regime. Under the old regime an NRI can claim a partial 80C, on life insurance, ELSS, home-loan principal and children's tuition, though an NRI cannot newly open PPF, NSC or the small-savings schemes, plus 80D for health insurance, 80G for donations, 80TTA on NRO savings interest and 80E on an education loan. But an NRI cannot claim 80TTB, which is for resident senior citizens, nor the disability and specified-illness reliefs under 80U, 80DD and 80DDB, which need the person to be resident, and cannot claim the Section 87A rebate.

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The regime decides it before anything else

Before working out which deductions you qualify for, check which regime you are on, because it can make the whole question moot. The default is now the new regime under Section 115BAC, and under it almost the entire chapter of deductions is switched off, no 80C, no 80D, no 80G, no 80E, no 80TTA. The only survivors are the employer's contribution to NPS and a couple of niche items, plus the standard deduction on salary.

So if you file on the default regime, the deductions below simply do not apply, however eligible you are. To claim them you must actively opt for the old regime. That is a real calculation, not a formality: an NRI with, say, home-loan principal and a life-insurance premium and some donations may be clearly better off under the old regime, while one with little to deduct is better off on the new regime's lower rates. The right move is to compute both, which is the first thing worth doing.

Under the old regime: what an NRI can claim

Choosing the old regime, an NRI gets a real but limited set. Under Section 80C you can claim life-insurance premiums, ELSS, the principal part of a home-loan repayment, and children's tuition fees, up to the ₹1.5 lakh cap. But the popular small-savings routes are closed: an NRI cannot newly open a PPF account, NSC or the five-year deposits, though a PPF opened while you were resident runs to maturity. Contributions to NPS qualify, including the extra ₹50,000.

Beyond 80C, an NRI can claim 80D for health-insurance premiums, 80G for donations, with the rule that any cash donation over ₹2,000 is disallowed, so give by bank transfer, 80TTA for up to ₹10,000 of interest on an NRO savings account, and 80E for interest on an education loan. These are the ones worth lining up if you go old-regime.

What an NRI cannot claim

Some deductions are barred to an NRI even under the old regime, because the law ties them to being resident. The ₹50,000 senior-citizen interest deduction under 80TTB is for resident senior citizens only, so an NRI cannot use it even at 60-plus, and takes the smaller 80TTA instead. The disability and serious-illness reliefs under 80U, 80DD and 80DDB all require the person, or the dependant, to be resident in India, so they are not available to a non-resident.

One more that catches people: the Section 87A rebate, which wipes out tax for smaller incomes, is only for resident individuals, so an NRI does not get it and pays tax from the first slab upward. None of this is a reason to overpay, it is a reason to file on the regime and the deductions that actually apply to you. A practising CA runs the old-versus-new comparison and claims exactly what an NRI is entitled to, no more and no less.

What's involved

What the CA actually does

  1. 1

    We run the old-versus-new comparison

    We compute your tax under both regimes, since the default new regime removes the deductions, and file on the one that leaves you paying less.

  2. 2

    We claim the deductions you qualify for

    Under the old regime we claim your eligible 80C items, 80D, 80G, 80TTA and 80E, so you get the full benefit an NRI is allowed.

  3. 3

    We keep you off the barred ones

    We do not claim 80TTB or the disability reliefs that need residency, so your return is not exposed to a later disallowance.

  4. 4

    We size the real tax

    We factor in that an NRI gets no 87A rebate, so the advance tax and final figure are right and there is no interest surprise.

What to have ready

Documents you'll typically need

  • Your Indian income for the year
  • Investment, insurance and donation proofs
  • Home-loan and education-loan statements, if any
  • Your PAN and residency details

Your destination country can change the details

Requirements differ from one consulate, university and visa route to the next, how recent the figures must be, how long funds must have been held, and which certificates are mandatory. We assemble the documents around the exact checklist you're applying under. To see how India's tax treaty with your country of residence affects related filings, set your country below or compare all 46 countries.

References on this page

  • The default new regime (Section 115BAC) removes almost all Chapter VI-A deductions; the old regime must be chosen to claim them
  • 80C is available to an NRI on a limited menu; an NRI cannot newly open PPF, NSC or small-savings schemes
  • 80D, 80G (no cash gift over ₹2,000) and 80TTA (NRO savings) are available; 80TTB, 80U, 80DD, 80DDB are not (resident-only)
  • The Section 87A rebate is for residents only; an NRI cannot claim it

Frequently asked questions

Common questions

You can claim 80TTA, the deduction of up to ten thousand rupees on savings-account interest, as an NRI on your NRO savings interest, but only under the old regime. You cannot claim 80TTB, the larger senior-citizen interest deduction, because it is for resident senior citizens only. So an NRI gets the smaller 80TTA on savings interest and not 80TTB.

Only under the old regime, and 80C on a limited menu (life insurance, ELSS, home-loan principal, tuition, not new PPF or small savings). The default new regime removes them, so you must opt for the old regime to claim them.

Almost certainly because you filed on the default new regime, which switches off nearly all Chapter VI-A deductions. To claim 80C, 80D, 80G and the rest, you must actively choose the old regime, and it is worth comparing both first.

No. The ₹50,000 80TTB deduction is for resident senior citizens only. An NRI, even at 60-plus, cannot claim it and takes the smaller ₹10,000 80TTA on NRO savings interest instead.

No. The Section 87A rebate is for resident individuals only, so an NRI pays tax from the first slab and cannot use the rebate that wipes out tax for smaller resident incomes.

The exceptions that change the answer

Where the general rule stops applying to you

Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.

Chapter VI-A headline limits

Right now: 80C Rs 1,50,000; 80CCD(1B) additional Rs 50,000; 80D Rs 25,000 (Rs 50,000 if senior); 80TTA Rs 10,000

Where it works differently

The new regime applies
None of these are available except the employer's 80CCD(2) contribution.
s.115BAC. Since the new regime is the default, most NRIs get nothing here unless they opt out via Form 10-IEA.
The NRI wants 80TTB (senior-citizen interest)
Not available. 80TTB is resident-only. 80TTA (Rs 10,000 on savings interest) is available.
s.80TTB is expressly for resident senior citizens.
Claiming 80C via PPF
An NRI cannot open a new PPF account, though an account opened while resident may run to maturity without extension.
PPF Scheme rules, not the Income-tax Act.
Income is special-rate capital gains
No Chapter VI-A deduction is allowed against it.
s.112A(2)/111A(2) bar.

Commonly got wrong

  • NRIs cannot claim 80C. They can, in the old regime, on qualifying payments such as life insurance, ELSS, tuition fees and home-loan principal.NRIs can claim 80C in the old regime. What they cannot claim is 80TTB, the disability deductions, and the section 87A rebate, all resident-only.
  • 80TTB gives NRIs Rs 50,000 of interest relief. 80TTB is resident-only.80TTA gives Rs 10,000 on savings interest; 80TTB is for resident senior citizens only.

Section 87A rebate

Right now: Rebate up to Rs 60,000; nil tax up to Rs 12,00,000 (new regime)

Where it works differently

The taxpayer is a NON-RESIDENT
s.87A is not available at all, at any income level.
The section is expressly limited to a resident individual. This is one of the most repeated errors in NRI self-filing.
Income includes special-rate capital gains
The rebate does not shelter s.112A LTCG.
Carve-out in the rebate computation.

Commonly got wrong

  • Income up to Rs 12 lakh is tax-free for everyone. Residents only. An NRI with Rs 12 lakh of Indian income pays full slab tax.Residents pay nil up to Rs 12 lakh. Non-residents get no s.87A rebate.

Section 87A rebate: old regime

Right now: Rebate up to Rs 12,500; nil tax up to Rs 5,00,000

Where it works differently

The taxpayer is a non-resident
Not available, in either regime.
s.87A is limited to a resident individual.

Commonly got wrong

  • Old-regime income up to Rs 5 lakh is tax-free for NRIs. s.87A is resident-only.Residents pay nil up to Rs 5 lakh in the old regime. Non-residents get no s.87A rebate in either regime.

Related

If this matched your situation, these go further

Returning to India as a senior citizen: the regime choice that decides your taxIs a critical illness or health-insurance payout taxable in India?When you owe advance tax as an NRI, and the interest that followsNRI ITR filing (we file for you)DTAA TDS recoveryStocks / equity redemption coordinationCapital gains calculator

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